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Dow's Liveris answers criticism with numbers

It's barely June and Dow Chemical Co. CEO Andrew Liveris already has had one heck of a year.

Things got rolling for Liveris on Jan. 21 when activist investor Daniel Loeb and his Third Point LLC hedge fund blasted Midland-based Dow in a letter to investors for what was described as "a poor operational track record across multiple business segments." Loeb and Third Point also called for Dow — one of the world's largest plastics and chemicals makers — to be split into two companies, with its petrochemicals business in one.

Within days, Liveris — a 38-year Dow veteran who has occupied the corner office since 2004 — had met with American business guru Warren Buffett, whose Berkshire Hathaway firm is a Dow shareholder. Buffett assured Liveris that Dow was heading in the right direction.

Liveris, naturally, didn't keep Buffett's assurances to himself. He took to the airwaves Jan. 29 on CNBC's "Squawk Box" program to share that info with viewers.

On the show, Liveris said Buffett had told him that "we're an owner and we like being an owner," adding that "we think (Liveris) has been running the company for the investors who will stay vs. investors who will leave."

Somewhere in New York, Loeb had to wince at those words. Liveris had to feel like a happy pastor who just had the Pope show up at his church's bake sale.

CNBC's website wrote about Liveris' appearance under the headline, "Hey Loeb, Buffett has my back." On that same date, Dow announced that full-year profit for 2013 grew more than four times to $4.8 billion. Part of that increase was a $2.5 billion settlement from a Kuwaiti firm over a failed business deal in 2008.

In a Q&A session with analysts, Liveris didn't mention Loeb or Third Point by name, but he did say he "agreed with the investor that there is an upside" to Dow's strategy. And Liveris pointed out that Dow already had sold off $10 billion of assets in recent years and in late 2013 announced plans to sell off $5 billion more.

Dow's plans to increase its share buyback program and to sell off other small businesses was seen by some as a response to Loeb's criticism. Company officials said these moves were part of an existing strategy. And like other companies in the region, Dow has announced plans to add polyethylene and ethylene capacity to take advantage of newfound supplies of shale-based natural gas.

Liveris was able to deliver more good news for Dow on April 23 when the company announced that first-quarter 2014 profit was up more than 60 percent to just under $1.1 billion, even though sales essentially were flat at almost $14.5 billion.

What has Dow's per-share stock price been doing amid all this hubbub? Well, it was around $43 before being goosed by the Loeb letter in late January. It proceeded to shoot up above $50 in late March before settling down a bit to close near $49.30 on May 19.

So do the higher profits and stock price mean that Liveris can relax a little?

Maybe not. On April 30, Loeb and Third Point fired another shot across Dow's bow. According to a letter to investors that was obtained by Reuters, Loeb said that Dow's integrated strategy is costing shareholders billions and that executives should work harder to boost results and transparency.